Why now is the time to get a plug-in hybrid car
Plug-in hybrid electric vehicles (PHEVs) are often described as a stepping stone between petrol or diesel cars and fully electric ones.
As well as having a rechargeable electric battery, they also have a petrol or diesel engine, so drivers can reduce their emissions whilst still having the convenience you get with a traditional car.
And, thanks to UK Chancellor of the Exchequer Rachel Reeves’ most recent budget, there’s never been a better time to get behind the wheel of one. For the next three years, PHEVs will be a tax savvy option for employees who benefit from company car or salary sacrifice car schemes.
PHEVs smooth the road to electric
As we approach the 2030 ban on the production of petrol and diesel cars, PHEVs are great option for employees that aren’t ready to switch to a fully electric car - also known as a battery electric car (BEV).
PHEVs will allow your employees to get to grips with charging, without being dependent on it. They’ll be able to cut their running costs and emissions whilst still being able to top up the tank at a petrol station – which is particularly helpful if you’re driving long distances away from home.
Plus, while many companies only offer BEVs via their salary sacrifice and company car schemes, PHEVs were the fastest growing powertrain in 2025, with new registration volumes increasing by 34.7%.
Therefore, offering PHEVs could make your benefits package more accessible and attractive to a larger pool of employees and boost employee satisfaction or retention.
Employees should opt for a three-year agreement
The Government is offering a temporary tax easement between April 2026-2028 that will preserve the tax advantage for employees who transition away from petrol or diesel cars.
The new legislation will see PHEV drivers liable for lower company car tax (also known as benefit-in-kind tax). Consequently, many PHEVs will have BiK rates as low as 7%.
If your employees are considering a PHEV via a company car or salary sacrifice scheme, suggest that they opt for up to a three-year agreement over a longer one as this means they’ll benefit from the lower BiK and avoid the tax spike in April 2028.
Supporting employees already in a PHEV
If an employee is already driving a PHEV and their agreement ends before 2028, they won't be impacted by the new regulations – but being aware of the changes will help them pick the right car for them next time around.
Your leasing partner can offer advice on how best to communicate the upcoming changes around PHEVs to your employees.
In a nutshell
For your employees, opting for a PHEV is a cost-effective way to drive more sustainably. As well as being a tax-efficient, they’re flexible, convenient, and a good first step towards electric driving.
For you as an employer, offering PHEVs via your company car or salary sacrifice scheme is a valuable tool you can leverage to make your benefits package attract and retain talent and boost employee satisfaction.
Supplied by REBA Associate Member, Zenith
The UK’s leading independent leasing, fleet management and vehicle outsourcing business.
